SBI Holdings and Sumitomo Mitsui Financial Group (SMFG) will launch a blockchain-based digital securities exchange in Osaka in the spring of 2022 to compete with the Tokyo Stock Exchange.
According to the Nikkei publication, the exchange created by SBI and SMFG will be the first stock exchange in Japan that will allow investors to trade digital securities using the blockchain. To prepare for the launch of the exchange in March, the companies will create an operator company, Osaka Digital Exchange (ODX). SBI will own 60% of ODX and SMFG will own 40%.
The exchange will use its own trading system and electronic trading platform, so that investors can conduct transactions outside of the usual public exchange. Companies are looking to make the exchange more attractive to investors by taking orders outside of the Tokyo Stock Exchange’s business hours and reducing the minimum price step.
The exchange will start working with digital securities in 2023. SBI believes that digital security technology will make it easier for investors to invest in non-traditional assets, such as real estate, as well as distribution rights to works of art and films. It is assumed that the exchange will become a market for such assets. SMFG’s brokerage company, SMBC Nikko Securities, will direct some customer orders to the new exchange.
Stock exchange operators are increasingly paying attention to the blockchain. Back in late 2017, the Australian Securities Exchange (ASX) announced that the blockchain would replace its current Clearing House Electronic Subregister System (CHESS). However, in October, the ASX postponed the launch of the system on the blockchain until April 2023 due to higher requirements for the platform than previously expected.